AWS Selling Motion
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AWS Selling Motion
AWS Pricing Philosophy
Reduced Prices
More Customers
More AWS Usage
More Infrastructure
Economies of Scale
Lower Infrastructure
Costs EcosystemGlobal FootprintNew FeaturesNew Services
Infrastructure Innovation
We pass the savings along to our customers in the form of low
prices and continuous reductions
AWS Pricing Principles
Pay as you go
Pay less by using more
Pay less when you reserve
Pay less when AWS grows
No up-front investment
Pay per use
How do customers lower their TCO with AWS?
1
Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web Services Accelerates Over Time.” December 2013
“Average of 400 servers replaced per
customer”
Replace up-front capital expense with lower “pay for what you use” variable cost
model
3
Periodic Price Reductions
Economies of scale allow AWS to
continually lower costs
2Pricing model choice to support variable & stable workloads
On-DemandReserved
SpotDedicated
…and that these benefits increase over time
Source: IDC Business Value of AWS Accelerates over time
According to IDC, this relationship between length of time using AWS and return is due to customers leveraging the more optimized environment to generate more applications along a learning curve.
$1 Investment in AWS
$8.40 in benefits
At 60 Months of using AWS
~8X$3.50 in benefits
$1 Investment in AWS
At 36 Months of using AWS
~3X
AWS enables lower TCO than on-premises environments
Utilization fundamentally higher in AWS cloud• Aggregating non-correlated workloads, scale, spot market
Amazon specific hardware designs• OEM acquisition of custom servers & net gear
• Direct purchasing of disk, memory, & CPU • AWS controlled hypervisor & net protocol layers
AWS Immense scale• New data centers built each year• Volume purchasing, highly automated, supply chain optimization
Non Virtualized Environment
VirtualizedEnvironment
UPFRONT COSTS
VARIABLECOSTS
VARIABLE COSTS
AWS
UPFRONTCOSTS
UPFRONTCOSTS
VARIABLE COST
Cost savings from running internal IT more efficiently
Cost savings from moving to AWS
Diagram is not to scale;; for AWS, upfront costs refer to Reserved Instances one-time payment. For customers not using RIs, the entire AWS cost is variable cost. For on-premises data centers, upfront costs refer to capital expense costs
Comparing TCO is not easy(But We’re Going to Try)
≠
TCO The Way IT orgs Typically See it illustrative
Hardware – Server, (+Maintenance) Software - OS, Virtualization Licenses(+Maintenance)
Hardware – Storage Disks
Network Hardware – LAN Switches, Load BalancerBandwidth costs
Server Admin Virtualization Admin4
Diagram doesn’t include every cost item. E.g. software costs can include database, management, middle tier software costs. Facilities cost can include costs associated with upgrades, maintenance, building security, taxes etc. IT labor costs can include security admin and application admin costs.
Server Costs
Storage Costs
Network Costs
IT Labor Costs
1
2
3
TCO The Way It Really Is illustrative
Hardware – Server, Rack Chassis PDUs, ToR Switches
(+Maintenance)
Software - OS, Virtualization Licenses
(+Maintenance)
Facilities Cost
Hardware – Storage Disks, SAN/FC Switches Storage Admin costs
Network Hardware – LAN Switches, Load Balancer
Bandwidth costsNetwork Admin costs
Server Admin Virtualization Admin
Diagram doesn’t include every cost item. E.g. software costs can include database, management, middle tier software costs. Facilities cost can include costs associated with upgrades, maintenance, building security, taxes etc. IT labor costs can include security admin and application admin costs.
Space Power Cooling
Facilities Cost
Space Power Cooling
Facilities Cost
Space Power Cooling
4
Server Costs
Storage Costs
Network Costs
IT Labor Costs
1
2
3
Cost optimization is…
going from…
to…
pay for what you use
pay for what you need
So how do we do it?
≠
The four pillars of cost optimization
Right-sizing Reserved Instances
Increase elasticity
Measure, monitor, and improve
Right-sizing
Right-sizing• Selecting the cheapest instance available while meeting performance requirements
• Looking at CPU, RAM, storage, and network utilization to identify potential instances that can be downsized
• Leveraging Amazon CloudWatch metrics and setting up custom RAM metrics
Rule of thumb: Right size, then reserve.(But if you’re in a pinch, reserve first.)
Reserved Instances
Commitment level1 year (No / Partial / All upfront payment)3 year (No / Partial / All upfront payment)RI Marketplace (for variable time durations)
AWS services offering RIsAmazon EC2 Amazon RDSAmazon DynamoDBAmazon RedshiftAmazon ElastiCache
* Dependent on specific AWS service, size/type, and region
Reserved Instances
Step 1: RI Coverage• Cover always-on resources.
Step 2: RI Utilization• Leverage RI flexibility to increase utilization.• Merge and split RIs as needed.
Rule of thumb: Target 70–80% always-on coverage and 95% RI utilization rate.
Users with urgent computing needs or
large amounts of additional capacity
Time or instance flexible
Experiment and/or build cost sensitive
businesses
EC2 Spot Pricing
Options• Spot fleet to maintain Instance Availability
• Spot block durations (1-‐6 hours) for workloads that must run continuously
Commitment level• None
* Compared to On Demand price based on specific EC2 instance type, region and availability zone
EC2 Spot Instance Details
Markets where the price of compute changes based on supply and demand
You’ll never pay more than your bid.
50% Bidof OD
75% Bid of OD
25% Bidof OD
¢You pay the market price87% discount!
Spot Rules
Increase elasticity
Turn off nonproduction instances• Look for dev/test, nonproduction instances that are running always-on and turn them off.
Autoscale production• Use Auto Scaling to scale up and down based on demand and usage (for example, spikes).
Rule of thumb: Shoot for 20–30% of Amazon EC2 instances running on demand to be able to handle elasticity needs.
Using right-sizing and elasticity to lower cost More smaller instances vs. fewer larger instances
29 m4.large @ $0.12 /hr$2,505.60 / mo*
59 t2.medium @ $0.052/hr$2,208.96 / mo*
*Assumes Linux instances in US-East at 720 hours per month
Putting it all together: Case Study 1
Challenge: Minimizing unit costs under period of massive growth.
A consistent measure of CPU processing power
Elastic compute unit (ECU)
The growth challenge
584 ECU
1,192 ECU2x YoY Compute Growth
33% decrease in monthly
EC2 costs!
Step 1: Right-size and update instancesm1 on demand$0.07 per ECU
c4 on demand$0.02 per ECU
The impact of right-sizing
70% reductionin unit cost
Step 2: Reserve
The impact of reservations
30% reductionIn unit cost
Putting it together
85% reductionin unit cost!
AWS options
Putting it all together: Examples
3 Tier Web App
Stateless
Scale based on demand
Web Tier
0
5
10
15
20
25
30
35
40
0 2 4 6 8 10 12 2 4 6 8 10
Web Servers
Reserved Spot On-‐Demand0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
0 0 0 0 0 0 0 0 0 0 0 0 0
Web Traffic
0
50
100
150
200
250
300
350
400
450
500
0 2 4 6 8 10 12 2 4 6 8 10
App Requests
0
5
10
15
20
25
30
35
40
45
50
0 2 4 6 8 10 12 2 4 6 8 10
App Servers
Reserved On-‐Demand Spot block
Stateful
Scale based on demand
App Tier
0
100
200
300
400
500
600
700
800
900
0 2 4 6 8 10 12 2 4 6 8 10
Database Requests
0
0.5
1
1.5
2
2.5
3
3.5
0 2 4 6 8 10 12 2 4 6 8 10
Database Servers
Reserved On-‐Demand Spot
Highly Stateful
Static at peak load
Database Tier
Summary: 3 Tier Web App
0
10
20
30
40
50
60
70
80
90
0 2 4 6 8 10 12 2 4 6 8 10
3 Tier Application Servers
Reserved On-‐Demand Spot
Summary
Have a balance! Across the three tiers our cost shaping consist of
• Spot 13%• On-‐Demand 11%• Reserved 76%
Remember!
“No server is easier to manage than no server” -‐Werner Vogels, CTO, Amazon.com.
Grid Processing
The World as Seen by Central ITHigher utilization can reduce IT spending…
The World as Seen by the BusinessBut higher utilization also creates IT constraints…
The New Way: In the Cloud!
0
100
200
300
400
500
600
1 2 3 4 5 6 7 8 9 10 11 12
Optimizing for cost and business results
3 year Reserved Instances On-‐Demand Spot
0
100
200
300
400
500
600
1 2 3 4 5 6 7 8 9 10 11 12
Going a step further with Spot blocks!
3 year Reserved Instances On-‐Demand Spot block Spot
The New Way: In the Cloud!
Purchasing Options by Industry
Web scale (e.g. Adtech)
Company
Enterprise SaaS Company
On Demand
Spot
Reserved Instances
On Demand
Spot
Reserved Instances
Onboarding Enterprise Gaming Company
Technology CompanyScientific Research
On Demand
Spot
Reserved Instances
Data Science
New app development Test and Development
Internal IT
Different Purchasing Options in a single company
Putting it all together
Cycle of cost optimization
$$$$$
Enterprise Discount ProgramCustomers who can make a commitment to at least $1M in AWS and have 20% growth of their current run rate may be eligible for the Enterprise Discount Program.
Program Construct
§ Customer commits to a minimum of $1M of AWS services
§ Customer selects one of three payment options, to receive the corresponding discount price
§ They should be willing to commit to a 20% growth from the most recent 3 month run rate.
Payment Options
§ 100% Prepay
§ Partial Prepay (30% of commitment)
§ No Prepay
Summary
Freedom to build unfettered
Freedom to get real value from data
Freedom to say Yes
AWS is more cost-effective than on-premises environments in both short-term and long-term. By leveraging the consumptions models you gain the…
Q & A
Thank you
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